Environmental consciousness has been influencing decisions across multiple sectors. Preserving the planet for future generations has never been more important. It may be hard to visualise how investing in an eco-friendly way can impact the future.Let’s look at what eco-friendly investing is as well as the impact it can have.
What Is Eco-Friendly Investing?Eco-friendly investing is a term that is used a lot, but what does it actually mean? Broadly, it is where you consider the impact on the natural environment when you are looking at potential investments.This approach seeks to align your company’s financial growth with a moral responsibility for environmental protection. Using ESG (Environmental, Social and Governance) criteria to inform decisions gives you transparency to the public. This can help to attract more clients and grow your businesses organically. Customers do say that they are happy to pay more for products or services which focus on eco-friendly practices.Not only does this strategy improve your portfolio, but it also improves your reputation among potential customers. If this is something you are interested in, seek professional guidance to help you make informed and logical decisions.Types Of Green InvestmentsThere are several different ways to invest with the environment in mind. Green shares are perhaps the easiest way. Buying shares in a company that primarily focuses on sustainability gives your portfolio a boost instantly.Another option is to target specific industries known for their sustainability and environmental responsibilities. One example of this is companies that are making strides in solar power. By investing in them, you are able to reap the benefits financially and against your ESG commitments.Assessing ESG CriteriaESG factors should be at the forefront of most investment decisions, especially as there is a legal requirement in the UK for larger companies to include it in annual reporting. Whilst there isn’t one single piece of legislation that lays out your responsibilities, there are still industry-specific regulations that may apply.The environmental aspect is fairly self-explanatory – you need to look at how the business minimises its impact on the environment.Social responsibilities include how the business contributes to fairness in society by creating equal opportunities and conditions for employees as well as local communities. Preventing abuses within the supply chain can also work towards this factor.The final part of the acronym is governance. Being able to demonstrate how the decision-making process within the company is honest and accurate is part of this. The business should also be run ethically and not accept bribes, for example.Being able to review reports that clearly state how these considerations are demonstrated within a potential investment allows investors to assess how eco-friendly the investment truly would be.
